Via Jay Morelock at FTN Financial:
Quarter-over-quarter fluctuations in GDP contain a lot of noise, allowing economists and market pundits to pick and choose statistics to make their case for a strong or weak economy. No matter how many times CNBC tells us the economy is strong – that we are right around the corner from escape velocity – the numbers tell a different story.
These year-over-year GDP numbers tell a story of steady growth; not spectacular, not dreadful. And while these numbers may by the envy of the developed world, they are nothing to brag about from an historical perspective. They certainly do not point to breakout growth.
Expectations of robust future growth are based on models of an economy that hasn’t been in place for more than 10 years. Five years into a “recovery” where we have yet to hit 2.5% GDP growth may signal it is time to reevaluate our assumptions.